|Riot Police in Syntagma Square|
The Occupy Wall Street movement raised the issue of private debt in public discourse. Far from being merely an problem of individual profligacy or moral failing, it is a structural problem of neoliberal financialization. And far from being merely an ‘economic’ problem, it is clearly a political problem that is intrinsically linked to the institutionalization of the oligarchic power of finance capital. While often being overlooked, the relationship between debt and politics – both in the form of struggles against debt and the effects these struggles have on elite driven processes of state formation and democratization – is one that is intrinsic to the Western political experience. After all, the birth of Athenian democracy resulted from the struggles by impoverished peasants against the brutalities of debt bondage.
The character of American ‘federalism’ was shaped by the struggles over debt and property in the late eighteenth century. Looking back today, we often assume that federalism – the union of states under a ‘federal’ legislative, judicial and executive power – to have been an inevitable development of ‘modern’ state formation. Or at the very least, federalism is presented as the most viable arrangement to meet the security needs of the individual states. But this is only part of the story; after all, the founders had a much broader notion of ‘security’ than we have today. The security of property played just as important a role in the contours of American federalism as did the securing of America’s borders from external threats.
All of this occurred in the context of the process of creating and ratifying a new constitution to replace the existing Articles of Confederation. While Jefferson shrugged off the episode as a necessary incident of a free people, stating that ‘No country should be so long without one [a rebellion]’, Hamilton took it as a more serious sign of the potential threat to a political order dominated by a mercantile-landowning oligarchy. Hamilton had this to day about the uprising:
‘Democratic legitimacy? It’s not necessary. Apparently they had some mandate when they made the request [for a bail-out]. So if they were empowered … to make the request, they are empowered to progress with negotiations,’ said of concerns that a caretaker government could not sign on to a bail-out package on the scale of those imposed on Greece and Ireland. ‘They simply cannot wait.’
Indeed, if neo-liberal technocrats have ‘learned’ anything from the crisis, it is not the inherent failure of their neo-liberal model, but rather, the obstacles that the democratic process puts in the way of the resolution of economic crisis in favour of capital. In essence, the problem is too much democracy: the plan now is to integrate the Stability and Growth Pact and the European Stability Mechanism into one system of governance that ‘would enable the Commission or Council to intervene in the preparation of national budgets and monitor their execution.’ In the wake of the European Council meeting of 23 October 2011, the European Commission elevated the office of Commissioner for Economic and Monetary Affairs to the position of Vice-President of the European Commission and granted the office extended powers of ‘economic surveillance and governance’. According to European Commission President José Barroso, the purpose of these institutional reforms is to strengthen ‘the Commission’s role in assessing, monitoring and coordinating national economic policies and budgets.’ The crisis of neo-liberalism in the Eurozone is thus provoking the further upward centralization of executive power at the European level, in the interests of maintaining neoliberal discipline.
None of this, however, should come as a surprise. Only those who believe in the ideological rhetoric of the New Right, or those who are beholden to pluralism—which maintains a relatively equal distribution of power in society that precludes dominance of a ‘ruling class’—or to varieties of institutionalism—that emphasise the autonomous nature of state capacities vis-a-vis entrenched economic elites—would be taken aback by these developments. The foreclosure of democratic process is not only compatible with the day-to-day practices of neo-liberal politics; it is intrinsic to the principles of neo-liberal political thought. While the neo-liberal era pays lip-service to the rhetoric of democracy, and neo-conservative defenders of neo-liberal policies wrap their reforms in the cloak of populism, neo-liberalism has always had an ambiguous relationship to democracy. As the current round of austerity measures demonstrates, the process of neo-liberal crisis management is one of elite accommodation – behind a parliamentary façade – that relies increasingly on an executive power that is unresponsive to the demands of the electorate.
The example of Shays’s Rebellion provides us with an important precedent. In the context of threats – from below – to powerful propertied interests, power is further concentrated and shifted up the political hierarchy to ensure that the popular classes will be less able to affect the contours of political and economic development. An important aspect of this history is that it gives us an understanding for the growth of the executive and coercive capacities of the modern state. New Right and libertarian narratives are inclined to associate the growth of the state with the development of social welfare programs and explain further state expansion to the growth of a sense of ‘entitlement’ amongst what Hayek called the ‘sinister interests’ of ‘unlimited democracy’.